State aid: Commission approves German ‘umbrella’ scheme to enable capital support to enterprises affected by coronavirus outbreak

The European Commission has approved German plans to set up a scheme under which the German federal and regional authorities can invest through debt and equity instruments in enterprises affected by the coronavirus outbreak. The scheme was approved under the State aid Temporary Framework. Under the scheme, the support will take the form of (i) subordinated loans, and (ii) recapitalisation instruments, in particular equity instruments and hybrid capital instruments. Individual measures will be limited to €250 million per beneficiary and according to German authorities the total provisional budget of the scheme is around €3.5 billion. The Commission found that the scheme notified by Germany is in line with the conditions set out in the Temporary Framework. The Commission concluded that the German scheme will contribute to managing the economic impact of the coronavirus outbreak in Germany. Furthermore, it is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of Germany, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework. On this basis, the Commission approved the scheme under EU State aid rules. Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “This scheme will allow the mobilisation of capital support by the German Länder and the Federal Government to help companies weather this crisis. It ensures that the State is sufficiently remunerated for the risk taxpayers assume, that there are incentives for the State to exit again, and that the support comes with adequate conditions to limit distortions of competition. We continue to work closely with Member States to ensure that national support measures can be provided as quickly and effectively as possible to mitigate the economic impact of the coronavirus outbreak, in line with EU rules.” The full press release is available online.